BOCA RATON, Fla., June 22, 2020 (GLOBE NEWSWIRE) -- Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF), a globally-focused, multi-state cannabis and hemp operator, has reached a definitive binding agreement to acquire 100% of the equity of Pennsylvania Medical Solutions, LLC, a Pennsylvania grower-processor owned by Vireo Health International, Inc. (CNSX: VREO; OTCQX: VREOF). The Permittee operates a 90,000 sq. ft. facility with approximately 45,000 sq. ft. of high-quality, indoor cultivation when construction is complete. The Permittee’s property can further accommodate an additional 25,000 sq. ft. of indoor cultivation bringing the total to 70,000 sq. ft. The Proposed Acquisition will solidify Jushi’s leadership position in Pennsylvania by adding equity ownership of Permittee, with its large-scale, high-quality, indoor cannabis cultivation and processing capabilities, to its other subsidiaries’ collective rights to operate up to 15 dispensaries. 1
Proposed Equity Acquisition Highlights:
- The facility produces high-quality, indoor grown flower, extracts, and concentrates;
- An expansion currently underway is expected to be completed by mid-2020;
- Increasing indoor cultivation from 20,000 sq. ft. to 45,000 sq. ft. of cultivation;2
- Supplementing current CO2 extraction with a new Class I, Division 1 ethanol extraction room;
- Post-expansion, the facility is expected to produce between 800 to 1,000 lbs. of dried flower per month;
- The facility is expected to supply the Company’s subsidiaries, and other licensed retail facilities.
“This acquisition allows Jushi to expand its presence in one of the most attractive medical cannabis markets in the country,” said Jim Cacioppo, Chairman and Chief Executive Officer of Jushi. “Upon completion Jushi will be able to provide high-quality, indoor flower and concentrates to our Pennsylvania patients who continue to experience constrained supply and high prices. Furthermore, we will be well-positioned to support an increase in demand and maintain the ability to further scale up the facility if required.”
Under the terms of the Agreement, Jushi will pay Vireo (subject to purchase price adjustments) US$16.3 million in cash, a US$3.8 million seller note,3 and assume a US$17 million facility associated with a long-term lease obligation. No equity will be issued in connection with this acquisition. Jushi intends to fund the cash portion of the Agreement with the proceeds from the debt financing, which Jushi announced concurrently with this announcement. The parties anticipate closing the Agreement by the end of August 2020.
As part of the Agreement, at closing, Jushi will have an assignable purchase option (“Option”) to acquire 100% of the equity of Pennsylvania Dispensary Solutions, LLC (“PADS”), a Pennsylvania medical marijuana dispensary permittee in the Commonwealth’s Northeast region. PADS currently operates two medical marijuana dispensaries in Scranton and Bethlehem, with the right to operate one additional dispensary in the region. The Option expires 18 months from closing of the Agreement, and is subject to certain closing conditions, including approvals from all applicable regulatory authorities.
Since inception, Pennsylvania's medical cannabis total marketplace has had a total of US$524 million in sales — US$215 million in purchases made by dispensaries from grower-processors and US$309 million made by patients and caregivers at licensed dispensaries. Currently, there are roughly 80 operational Pennsylvania dispensaries and 297,317 medical marijuana patients and 29,040 caregivers registered in the Program, according to the Pennsylvania Department of Health.
The Proposed Acquisition is subject to certain closing conditions, including approvals from regulatory authorities. There can be no assurance that the transaction will be completed.
Jushi is reaffirming its 2021 revenue guidance of $200 to $250 million and will provide more detail at the expected close of the Proposed Acquisition.
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1 Seven stores are currently operational. Includes three additional stores related to an equity investment under definitive agreement
2 Preliminary expansion capacity, subject to completion of additional due diligence
3 8% unsecured seller note, four-year maturity, with all principal and interest due at maturity
About Jushi Holdings Inc.We are a globally focused cannabis and hemp company led by an industry-leading management team. In the United States, Jushi is focused on building a multi-state portfolio of branded cannabis and hemp-derived assets through opportunistic acquisitions, distressed workouts and competitive applications. Jushi strives to maximize shareholder value while delivering high-quality products across all levels of the cannabis and hemp ecosystem. For more information, please visit https://www.jushico.com/ or on Facebook, Twitter, or LinkedIn.
About Vireo Health International, Inc.
Vireo Health International, Inc. is a physician-led cannabis company focused on building long-term, sustainable value by bringing the best of medicine, science, and engineering to the cannabis industry. With operations strategically located in early-stage, limited-license medical markets, Vireo manufactures pharmaceutical-grade cannabis products in environmentally-friendly greenhouses and distributes its products through its growing network of Green Goods™ retail dispensaries and hundreds of third-party locations. Its current core medical markets of New York, Minnesota, Pennsylvania, Arizona, New Mexico, and Maryland all have the potential to enact adult-use legalization in the next three to 24 months, and two additional markets in Puerto Rico and Massachusetts also have potential for commercialization. Combined with its teams' focus on driving scientific innovation within the industry and securing meaningful intellectual property, Vireo believes it is well positioned to become a global market leader in the cannabis industry. Today, eight of its 10 markets are operational with 13 of its 32 total retail dispensary licenses open for business. For more information about the company, please visit www.vireohealth.com.
